Energy Transfer Growth and Income Potential Remain Strong

Energy Transfer shows promise with a 6.5% yield and solid growth. Analysts expect its adjusted EBITDA to grow around 5% this year, indicating steady performance ahead.

Date: 20-02-2025

AI Rating: 7

Growth Outlook
The report emphasizes Energy Transfer's growth in adjusted EBITDA, which increased by 13% last year, alongside a 10% rise in distributable cash flow. This growth primarily stems from acquisitions, particularly its merger with Crestwood Equity Partners and the acquisition of WTG Midstream.

Earnings Growth
For the current year, Energy Transfer anticipates adjusted EBITDA growth of about 5%, driven by its acquisition and ongoing organic expansion projects. Although growth is expected to moderate this year, company leadership projects a reacceleration of earnings growth in 2026 as capital is deployed on impactful growth opportunities.

Operational Strategy
The growth story is supported by significant investments in midstream assets, particularly in the Permian Basin, where Energy Transfer is positioned to capitalize on anticipated strong volume growth. Its expansion projects, like the Hugh Brinson Pipeline, are critical for addressing rising gas demand.

Future Growth Themes
The report identifies three main growth themes: rising volumes from the Permian Basin, increasing natural gas fuel demand, and a strong global market for U.S. natural gas liquids (NGLs). The company is actively investing in infrastructure to support these demands, including multiple NGL infrastructure projects totaling $1.1 billion.

Investment Potential
Overall, Energy Transfer is positioning itself as an attractive long-term investment with high distribution yields and solid growth projections. This combination could lead to compelling total returns over the coming years, as outlined by its strategic initiatives and growth expectations.

Stocks: ET